The real estate market in Northern Virginia has been very competitive recently. And if you are a home buyer here, then you know it’s actually Über-Competitive.
It is easy to understand that anyone selling their home wants the highest price, but I thought I should share some strategic buyer tips that will help your offer be even more impressive.
~ What Home Sellers Want ~
- Earnest Money Deposit Check
- Time Frames
- Down Payment
- Approval Letters from lenders
Earnest Money Deposit: If you are making an offer on a home you will need to write an EMD. Home sellers want that deposit to be a large number.
I remind my clients that the check will be deposited (within three days of contract acceptance) only if the offer is accepted and there is a ratified contract with the seller. The deposit will show up on your HUD-1 Settlement Statement as a credit toward your down payment or expenses. If you have 100% financing then it will be applied to just closing costs, and any excess is returned to you.
So, what is the right number? It depends on your price-point… but a good rule of thumb is higher is better. $10,000 is okay but $25,000 is really putting your money where your mouth is!
Time Frames: There are many opportunities to establish reasonable time frames for contingencies or responses. Home sellers want short time frames.
If you are a really serious home buyer, completing a home inspection in five days shows organization and smart decision making. Buyers can control these activities easier than having an appraisal or loan approval, so, get your controllable activities done in a fast time frame and the seller will be impressed.
Down Payment: In the Northern Virginia real estate market, most accepted offers have down payments beyond 20%. Home sellers want to see you have enough cash on hand.
Most of the financial gurus out understand that having a large mortgage for thirty years at 3.5% is amazing for the average person, but home sellers can view a large mortgage as having more risk when getting approval from the mortgage underwriter. Like you, they are reading blogs about selling their home which warns them of deals falling apart – right or wrong, understand they just want to get their house sold.
If it is possible, you may want to show you are putting down 25% or more to demonstrate your financial strength.
Approval Letter from Lenders: When you put together an offer on a home, then you need to have a letter from a mortgage lender that states that you are qualified for financing. Home sellers want to see a third party statement that you are legit. And a lender letter that has a recent date on it too, please.
There really isn’t a set “lender-letter” out there, but there are a few things you can do to craft a better than average lender letter. Start the process with a well known, local lender that the seller will recognize — for example, a faxed letter from Bob’s Mortgage Enterprises of Kensington may just raise a red flag.
Your letter should clearly show an approved price range, type of loan, that a credit report has been reviewed, that income or assets have been verified, and maybe that your application has been reviewed by an underwriter. Again, you want the letter to look professional, come across as organized, no BS, and show you are able to go to Settlement.
Having a strategy that works in your favor gives you a better opportunity to be the offer a seller selects to work with. In a recent multiple bid situation in Ashburn there were four offers (my client won) and in one in Vienna there were nine offers (my client was the seller). In each case I saw a variety of scenarios presented to sellers who had to make a very hard decision – keep that in mind.
Let me know if you have questions here on the blog or send me an email to set up a one-on-one conversation.